Oil prices climb on tightening USA market

Oil prices climb on tightening USA market

Troy Powers
July 8, 2018

The Iranian OPEC governor had on Thursday taunted Trump for his tweets urging OPEC to reduce prices, saying the United States president's tweets have backfired, having driven the prices up by at least $10 per barrel.

"The OPEC Monopoly must remember that gas prices are up & they are doing little to help".

Net U.S. crude imports rose last week by 1.4 million barrels per day.

U.S. light crude jumped 90 United States cents, or 1.2%, to $74.84 a barrel, its highest since November 2014, before easing back to $74.59, up 65c, by 8.10am GMT.

Trump on Wednesday accused the Organization of the Petroleum Exporting Countries of driving fuel prices higher, and urged Saudi Arabia to pump more if it wanted Washington to continue protecting it against Iran.

"This must be a two way street", he wrote, adding in block capitals, "REDUCE PRICING NOW!"

That may reduce the pressure on Saudi Arabia to keep oil prices high, said John Kilduff, partner at energy hedge fund Again Capital LLC in NY.

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OPEC together with a group of non-OPEC producers led by Russian Federation started to withhold output in 2017 to prop up the market.

Saudi Arabia has wanted to sell shares in Aramco to bring in foreign investment to diversify its economy, but legal concerns about listing in places like London or NY have presented complications.

To make up for potential shortfalls in supply from Iran sanctions as well as other disruptions including Libya and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) has agreed with Russian Federation and other oil-producing non-OPEC members to raise output from July.

Recent price rises have also been spurred by a USA announcement that it plans to re-introduce sanctions against Iran from November, targeting oil exports.

USA tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday and Beijing has vowed to respond immediately in kind, setting the two world's biggest economies on a path toward a full-blown trade conflict. "Because the oil market is already in tight supply due to the numerous outages, this would drive global prices (Brent) further up", Commerzbank said in a note.

Despite the pressure from the US, Indian official sources who briefed the media on Wednesday made it clear that Iran, India's third largest supplier of oil, remains an "important near neighbour".